Gold & Silver Daily

Ed's Critical Reads

Oct 30, 2014

Fed ends QE3 and sends upbeat signals on economy

The Federal Reserve voted on Wednesday to end its bond-buying stimulus program commonly known as QE3 and sent several upbeat signals to markets that it was not worried about global weakness, low inflation or a wobble in financial markets.

In the statement, the Fed left unchanged its pledge that rates would remain near zero for a “considerable time.” But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated.

The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.”

This marketwatch.com article appeared on their website at 4:02 p.m. EDT yesterday---and today's first news item is courtesy of Casey Research's own Louis James.

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Greenspan Sees Turmoil as Q.E. Boost to Markets Unwinds

Former Federal Reserve Chairman Alan Greenspan said he doesn’t think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

“I don’t think it’s possible,” Greenspan said during an event today at the Council on Foreign Relations in New York, responding to a question about the likely market impact of the Fed’s exit.

While the Fed’s bond-buying program has been a “terrific success” in boosting asset prices, it hasn’t galvanized effective demand in the real economy, Greenspan said.

This brief Bloomberg piece showed up on their Internet site at 8:35 a.m. Denver time yesterday morning---and I thank reader Ken Hurt for sharing it with us.

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And the Biggest Beneficiary of QE3 was...

Aside from the S&P 500 of course, which made billionaires out of millionaires (even if it failed to make billionaires into trillionaires this time around -  we will have to wait for QE4 or QE5 for that), some may wonder: who was the biggest beneficiary of QE3? It certainly wasn't the U.S. middle class, which has seen its real wages decline in 6 of the past 7 months, and its disposable income is back at levels not seen since the mid-1990s.

No, the biggest winner of QE3 is the same entity that we noted benefited the most from Q.E. over the past 6 years, and which even the WSJ realized was the primary beneficiary of the trillions in cash created out of thin air by the Fed, when in late September Hilsenrath wrote "Fed Rate Policies Aid Foreign Banks"...  something we first said back in 2011 with "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went."

So yes, European banks: feel free to send your thank you cards to the Fed: without its $1.3 trillion cash injection who knows how many of you would have passed the ECB's "no deflation to model" most recent Stress Test.

A word of warning: let's all hope that now, with some $1.5 trillion in Fed cash on foreign (most insolvent European) bank balance sheet, or just about half of all Q.E. liquidity injections since the start of QE1, European banks are finally solvent. Or else, deflation, inflation, stagflation, hyperinflation, or what have you, the Fed will be storming right back in to bail out Europe's insolvent banks the U.S. middle class all over again.

This excellent article, along with two nifty charts, appeared on the Zero Hedge website at 3:18 p.m. EDT Wednesday afternoon.  It's worth reading---and I thank reader U.D. for sending it.

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David Stockman: Good Riddance to Q.E.— It Was Just Plain Financial Fraud

QE has finally come to an end, but public comprehension of the immense fraud it embodied has not even started. In round terms, this official counterfeiting spree amounted to $3.5 trillion— reflecting the difference between the Fed’s approximate $900 billion balance sheet when its “extraordinary policies” incepted at the time of the Lehman crisis and its $4.4 trillion of footings today. That’s a lot of something for nothing. It’s a grotesque amount of fraud.

The scam embedded in this monumental balance sheet expansion involved nothing so arcane as the circuitous manner by which new central bank reserves supplied to the banking system impact the private credit creation process. As is now evident, new credits issued by the Fed can result in the expansion of private credit to the extent that the money multiplier is operating or simply generate excess reserves which cycle back to the New York Fed if, as in the present instance, it is not.

But the fact that the new reserves generated during QE have cycled back to the Fed does not mitigate the fraud. The latter consists of the very act of buying these trillions of treasuries and GSE securities in the first place with fiat credits manufactured by the central bank. When the Fed does QE, its open market desk buys treasury notes and, in exchange, it simply deposits in dealer bank accounts new credits made out of thin air. As it happened, about $3.5 trillion of such fiat credits were conjured from nothing during the last 72 months.

All of these bonds had permitted Washington to command the use of real economic resources. That is, to consume goods and services it obtained directly in the form of payrolls, contractor services, military tanks and ammo, etc and, indirectly, in the form of the basket of goods and services typically acquired by recipients of government transfer payments. Stated differently, the goods and services purchased via monetizing $3.5 trillion of government debt embodied a prior act of production and supply. But the central bank exchanged them for an act of nothing.

This right-on-the-money commentary appeared on David's website yesterday sometime---and my thanks go out to Roy Stephens for finding it for us.  West Virginia reader Elliot Simon sent this moneynews.com story on the same issue headlined "Financial Times: Q.E. Might Be a 'toxic legacy' Poisoning America".  It's worth reading as well.

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Jim Rickards: "Central bankers are impotent"

Data coming out of the U.S. demonstrates lower mortgage yields and a surge in refinancings are adding to 4-year lows in gas prices to give consumers more disposable income. Jim says this isn’t as bullish as us what he thinks of the new data and also gives us his thoughts on divisions at the ECB.

The preamble to this must watch interview begins at the 4:20 minute mark of Russia Today's "Boom Bust" program---and it runs for a bit over eight minutes.  It was posted on the youtube.com Internet site on Monday sometime---and I thank reader Harold Jacobsen for bringing it to our attention.

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Mortgage Purchase Applications Plunge to 19-Year Low

Presented with little comment...because realistically what is there to say about a so-called 'housing recovery' when the volume of applications for home purchases is the lowest since August 1995. Keep believing that lower rates will support home prices... keep believing the Fed's Q.E. worked... or face facts, this is not your mother's housing market any more.

This short Zero Hedge story has three must see charts---and it was posted on their website at 11:03 a.m. EDT yesterday---and I thank reader 'David in California' for sending it along.

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Economic, Political Discontent Make for a U.S. Midterm Double Punch

A double punch of economic and political dissatisfaction marks public attitudes in the closing week of the 2014 midterm campaign – a dynamic that reflects poorly on the president’s performance, bolstering his Republican opponents.

The discontent in the latest ABC News/Washington Post poll is palpable. Despite its fitful gains, seven in 10 Americans rate the nation’s economy negatively and just 28 percent say it’s getting better. In a now-customary result, 68 percent say the country’s seriously off on the wrong track.

There’s no respite politically. Six in 10 express little or no trust in the federal government to do what’s right. Fifty-three percent think its ability to deal with the country’s problems has worsened in the last few years; among likely voters that rises to 63 percent.

Views of the president’s performance suffer in kind. Barack Obama’s job approval rating, 43 percent overall, is virtually unchanged from his career-low 40 percent two weeks ago. A steady 51 percent disapprove, essentially the same all year. His ratings on the economy – still the country’s prime concern, albeit one of many – are similarly weak, a 10-point net negative score.

This article was posted on the abcnews.go.com Internet site at 7:00 a.m. EDT on Tuesday morning---and it's something I found in yesterday's edition of the King Report.

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Tax evasion targeted in pact signed by 51 countries

Finance ministers and tax chiefs from 51 countries signed an agreement on Wednesday to automatically swap tax information beginning in 2017.

Canada was not among the first 51 countries to agree to the effort to end tax evasion, but said it would be among 35 more countries joining the agreement in 2018. The first signatories will have to invest more over the next two years to prepare their tax departments.

“We expect this will provide tax authorities across the world with the details of billions of pounds of assets held overseas,” U.K. Finance Minister George Osborne said as countries signed the agreement in Berlin.

“Under the agreement a wide range of information will be exchanged on offshore accounts, including account balances, interest payments and beneficial ownership, and this will greatly increase the ability of governments to clamp down on tax evaders and to ensure that what they owe, they pay," he said.

This article appeared on the Canadian Broadcasting Corporation website at 3:41 p.m. EDT on Wednesday---and it's courtesy of reader 'h c'.

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U.K. faces 'debt time bomb' from ageing population

Britain's ageing population has created a "debt time bomb" that can only be defused through a combination of significant spending cuts, faster increases in the state pension age and ending universal free healthcare, according to a respected think-tank.

The Institute of Economic Affairs (IEA) warned that the Government would need to slash public spending by a quarter in order to get Britain's debt mountain down to sustainable levels.

In a set of radical proposals, the IEA called on the Government to end "unhelpful" policies such as the "triple lock guarantee" that ensures the state pension increases by the higher of inflation, average earnings or a minimum of 2.5pc every year.

"Politicians must wake up to the size of the debt time bomb in the UK. Older generations have voted themselves benefits that will indebt future generations, meaning crippling tax hikes for our children and grandchildren," said Philip Booth, editorial director at the IEA.

A not unfamiliar 'baby boomer' problem in all Western countries these days.  This article showed up on the telegraph.co.uk Internet site at 5 a.m. GMT yesterday morning---and it's the second offering in a row from reader 'h c'.

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Take your mortgage to the grave, older U.K. borrowers told

Older home owners will be told to take mortgages for life or leave their homes under plans to tackle Britain's interest-only mortgage crisis.

Several major banks will propose "lifetime" contracts to borrowers in their 50s and 60s who face a shortfall when their mortgage ends, The Telegraph understands.

The lenders will allow customers to repay just the interest on their debts until they die, at which point the properties will be sold and a large chunk of the proceeds passed to the bank.

"Lenders are trying to keep people in their homes, rather than repossess them, and these new deals will ensure the bank still owns most of the house when they die."

How morbid!  You couldn't make this stuff up.  This is another story from The Telegraph---and this one was posted there at 10 p.m. GMT on Tuesday evening.  It's the final offering of the day from reader 'h c', for which I thank him.

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France to hand over first Mistral helicopter carrier on Nov 14 -- Russia

France may hand over the first of two Mistral helicopter carriers to Russia on November 14, Deputy Prime Minister Dmitry Rogozin said. He announced that Moscow had received an invitation to take delivery at France’s Saint-Nazaire shipyards.

“Rosoboronexport [Russia’s state owned arms exporter] has received an invitation to arrive in Saint-Nazaire on November 14, where 360 Russian sailors and 60 specialist trainers are already,” Rogozin said.

On that day, Vladivostok – the first of two Mistral-class helicopter carrier ships – should be handed over to Russia. The Deputy PM also assumed the second carrier, the Sevastopol, would also be in dock.

“We act from the fact that France must protect its own reputation as a reliable partner, including on issues of military cooperation," he said. France has always stressed that for them this would be “the litmus test of their national pride and sovereignty,” the Deputy PM added.

This Russia Today news item put in an appearance on their Internet site at 5:18 p.m. Moscow time on their Wednesday afternoon, which was 10:18 a.m. EDT in New York.  I thank Roy Stephens for sending it.

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Deutsche Bank Replaces Executives as Legal Expenses Soar

Deutsche Bank AG, Germany’s biggest lender, is replacing its finance and legal chiefs as mounting litigation expenses wiped out quarterly profit and the firm begins talks to settle probes into alleged market rigging.

The bank swung to a net loss in the three months through September after setting aside 894 million euros ($1.1 billion) for litigation, the Frankfurt-based company said yesterday. It named Goldman Sachs Group Inc.’s Marcus Schenck to succeed Stefan Krause as chief financial officer and promoted Christian Sewing to the board to oversee the firm’s legal affairs.

“The number and level of executives being replaced point to a house-clean,” said Mark Williams, a former bank examiner for the Federal Reserve and now a lecturer at Boston University’s School of Management. “This type of regime change creates instability and you would only do it if you think it will restore stability.”

“The problems are much deeper than what we see” at Deutsche Bank, said Tom Kirchmaier, a fellow in the Financial Markets Group at the London School of Economics. “Why didn’t they promote someone from the inside for the CFO role? It’s puzzling. It would have been a natural choice.”

I posted a story about this in yesterday's column, but this Bloomberg piece, filed from Frankfurt at 5:01 p.m. MDT yesterday afternoon, is far more in depth---and I thank Elliot Simon for finding it for us.

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Russia calls U.N. agency's conflict zone risk proposals 'superficial'

Russia, which the United States has accused of backing Ukrainian rebels who shot down a Malaysian airliner in July, called new proposals from the United Nations aviation body on mitigating risks over conflict zones rushed and "superficial", according to a document obtained by Reuters.

The  International Civil Aviation Organization (ICAO) launched a task force in July to look at ways to better share information about risks above conflict zones. The task force has laid out 12 proposals, seen by Reuters and confirmed by sources at the Montreal-based agency.

The Russian submission to the ICAO Council, which was also signed by Bolivia, says the agency "practically has lost" its role in investigating the downing of Malaysian Airlines MH17 and criticized a pilot program to share intelligence.

It said the agency’s pursuit of a centralized intelligence sharing mechanism was outside its mandate, and could lead to false information being given to pilots.

This Reuters article, co-filed from Montreal and Toronto, appeared on their website at 4:12 p.m. EDT on Wednesday afternoon---and it's another contribution from Roy Stephens.

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Rosneft "Radical" Sanctions Retaliation Proposal Sends Russian Bonds, Currency Plunging

10-year Russian bond yields have broken above 10%, trading at the highest yields since 2009 as the Ruble plunges once again to fresh record lows against the dollar. These significant moves come on the heels of two notable headlines overnight.

First, German exports to Russia slumped 26.3% YoY in August (down a stunning 16.6% year-to-date with vehicle exports plunging 27.7%) as sanctions batter bilateral trade. Secondly, Rosneft has proposed what is being described as "radical" reactions to the West's sanctions, which the Kremlin has (for now) denied.

This Zero Hedge piece was posted on their website at 10:06 a.m. yesterday morning---and it's the second offering of the day from reader 'David in California'.  It's worth reading.

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#62: Russia jumps record 30 places in ‘Doing Business’ ranking

Russia is now ranked 62nd in the World Bank’s new 2014 Doing Business report, which measures the ease of doing business in 189 countries worldwide. The country climbed 30 positions from 92nd spot in 2013.

Russia is ahead of Moldova in 63rd place and behind Greece in 61st.

Singapore, New Zealand, Hong Kong, Denmark, and South Korea are the top five countries in terms of ease of doing business in this year’s report.

The 189 economies are evaluated on how close their business regulations compare to the best global practices, with a higher score for a more efficient business climate and stronger legal institutions.

This news item appeared on the Russia Today website at 10:44 a.m. Moscow time on their Wednesday morning---and it's the final offering of the day from Roy Stephens, for which I thank him.

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Hugo Salinas Price: The Fall in International Reserve Assets

Something important has happened since August 15, this year. I have been following  global central bank "international reserve assets" (excluding gold)  as tallied by Bloomberg, for the past 18 years, and I have seen them increase steadily over the whole of that time.  My source has been Doug Noland's "Credit Bubble Bulletin" over at www.prudentbear.com.

In September of last year, I wrote an article, "The Stalling Growth of International Reserves" published on my website, www.plata.com.mx

Now the quite extraordinary news is that International Reserve Assets are not just stalling, they are actually going into reverse.

Of course repricing gold would fix the International Reserves situation at once, dear reader---and that may be in the cards at some point.  This brief article put in an appearance on the plata.com.mx website yesterday---and I found it embedded in a GATA release.  It's worth the 90 seconds of time it will take to read it.

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Lawrence Williams: The new London gold ‘fix’ – the battle has commenced

By virtue of having already developed benchmark setting software for the other principally traded precious metals one might assume that the Thomson Reuters/CME and LME proposals might be the front runners. 

However from a purely competition aspect the prospect of the organisation which runs the principal US gold trading market in COMEX (the CME) also setting the London benchmark price smacks of an almost monopolistic opportunity which might stand against it – although it obviously didn’t in the case of silver. 

The selection of CME might also generate apoplectic opposition from the North American gold investment community, indeed from gold bugs everywhere, given that they see the CME’s COMEX market as being uncontrollably rigged by some major banks through the use of gold futures (utilising vast paper gold transactions, hugely in excess of the amounts of physical gold available) to control (manipulate) physical market pricing.

This commentary by Lawrie appeared on the mineweb.com Internet site on Wednesday sometime---and I found it all by myself.

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Greenspan: The Price of Gold Will Rise

Q: "Why do central banks (still) own gold?"

Greenspan: “This is a fascinating question.”  He did not answer the question, but he did point out: “Gold has always been accepted without reference to any other guarantee.”

While Greenspan did not want to comment on current policy, he was willing to give a forecast on the price of gold, at least in a Greenspanesque way.

Q:  Where will the price of gold be in 5 years?” 

Greenspan: “Higher.” 

Q: How much?” 

Greenspan: “Measurably.

It's a safe bet, considering Greenspan's ability at understatement---"measurably" means it will rise by a lot.  This commentary, which falls into the must read category, was posted on the merkinvestments.com Internet site on Wednesday---and the first reader through the door with the story was Ken Hurt.  Zero Hedge put its own spin on this in an article headlined "Alan Greenspan: Q.E. Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold".  Reader 'David in California' sent that one our way.

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Oct 29, 2014

Fed Will Likely Signal No Rate Hike Anytime Soon

The global economy has slumped. Turmoil has gripped financial markets. And the U.S. job market, despite steady gains, still isn't fully healthy.

Yet when the Federal Reserve meets this week, few foresee any major policy changes. The Fed is expected to complete a bond-buying program, which was intended to keep long-term interest rates low. And, to support the economy, it will likely reiterate it's in no rush to raise its key short-term rate.

The economy the Fed will discuss has been strengthening, thanks to solid consumer and business spending, manufacturing growth and a surge in hiring that's lowered the unemployment rate to a six-year low of 5.9 percent.

Still, global weakness poses a potential threat to U.S. growth. The housing industry is still struggling. And Fed Chair Janet Yellen has stressed that while the unemployment rate is close to a historically normal level, other gauges of the job market remain a concern. These include stagnant pay; many part-time workers who can't find full-time jobs; and a historically high number of people who have given up looking for a job and are no longer counted as unemployed.

And don't forget that Jim Rickards is on record as saying the interest rates will never rise again.  I concur.  This short AP story, filed from Washington, appeared on thestreet.com Internet site at 12:31 p.m. EDT on Monday---and I found it in yesterday's edition of the King Report.

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U.S. Banks See Worst Outflow of Money in ETF Since 2009

The Financial Select Sector SPDR, an exchange-traded fund targeting banks and investment firms, had the biggest withdrawal last week since 2009 amid concern that low interest rates and market swings will hurt profits.

Investors pulled $913.4 million from the $17.5 billion ETF, whose top holdings include Berkshire Hathaway Inc., Wells Fargo & Co. and JPMorgan Chase & Co., a shift that turned its flow of funds negative for the year. About 143 million shares of the ETF have been borrowed and sold to speculate on declines, the most since June 2012, according to exchange data compiled by Bloomberg.

Banks have waited for years for higher rates and more robust trading to boost revenue from lending and market-making. Weaker-than-expected global growth could prompt the U.S. central bank to slow the pace of eventual interest-rate increases, Federal Reserve Vice Chairman Stanley Fischer said Oct. 11. The severity of market swings this month also boosts the risk that banks will incur losses while facilitating client bets, and it may slow mergers and acquisitions.

This Bloomberg article appeared on their website at 10:00 p.m. Denver time on Monday evening---and I thank reader 'David in California' for sending it along.

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U.S. Home Ownership Rate Drops to 1983 Levels: Here's Why

The last time U.S. home ownership declined down to 64.4% (which the Census Bureau just reported is what U.S. home ownership declined to from 64.7% in Q2), was back in the fourth quarter of 1983.

It goes without saying that this is just about the most bearish news possible for those few who still believe in the American home ownership dream.

Of course, those who have been following real-time rental market trends would be all too aware there is no rebound coming to the home ownership rate. The reason is simple: increasingly fewer can afford to buy, instead having no choice but to rent, which in turn has pushed the median asking rent to record highs. In fact in the past two quarters, the asking rent was just $10 shy of its time highs at $756 per month.

This very worthwhile read, along with some first-rate charts, appeared on the Zero Hedge website at 11:18 a.m. EDT on Tuesday morning---and I thank Manitoba reader U.M. for sharing it with us.

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Sprott Money Weekly Wrap-Up With Your Humble Scribe

Sprott Money's Jeff Rutherford and I spent 6:11 minutes talking to each other last Friday, but for technical reasons the audio link wasn't available until yesterday, so here it is now.

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Mike Maloney: Did Hillary Really Say That?

This is not a democrat or republican issue. This is about the people in Washington being so disconnected from reality that they are dangerous...they don't understand how the economy works.

This 21:20 minute audio interview with Mike was posted on the hiddensecretsofmoney.com Internet site on Tuesday sometime---and I must admit that I haven't had time to listen to it yet.

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Lloyds Cuts 9,000 jobs and shuts 150 branches as profits leap

Lloyds has predicted that visits to its branch counters will halve over the next three years after a £1bn investment in digital technology and the closure of 200 high street locations.

The bank on Tuesday unveiled a three-year cost-cutting plan that will see 9,000 job losses and its branch estate reduced by 6pc as it unveiled a 35pc rise in operating profits and set aside another £900m related to PPI mis-selling.

However, it said customers would benefit from an increase in digital services and committed to shutting branches at a slower rate than its rivals.

This article appeared on the telegraph.co.uk Internet site at 3:59 GMT yesterday---and I thank reader 'h c' for sending it.  And the 'thought police' over at The Telegraph have given the story a brand new headline, it's now a much softer sounding "Lloyds Bank closures: Branch transactions to halve within three years"

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Rampant financial crime in City of London eroding public trust - BoE

A top Bank of England (BoE) official warns widespread financial crime in the City of London is eroding public trust. The BoE’s criticism surfaced as it launched a review to tackle market manipulation.

In her first public address since adopting the position of BoE Deputy Governor, Nemet Minouche Shafik denounced the actions of UK traders in foreign exchange, currencies and bonds markets, warning financial misconduct in these sectors goes well beyond a few rogue financiers.

Referencing LIBOR riggers’ behavior as unacceptable, she suggested fines for such fraudulent activity were inadequate and signified “salt rubbed into the wounds to public confidence in financial markets.”

She didn't mention the precious metal markets---and I'm sure that was deliberate.  This must read article appeared on the Russia Today website at 7:58 p.m Moscow time on their Tuesday evening, which was 12:58 p.m. EDT in New York.  I thank Harry Grant for sliding this into my in-box in the wee hours of this morning.

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Life after Libor: bankers to face personal fines for rigging prices

Banks could face a significant new regulatory crackdown on their wholesale market activities as the financial authorities seek to prevent a repeat of the scandals that have destroyed the reputation of the sector in recent years.

The Bank of England – in conjunction with the Financial Conduct Authority and the Treasury – yesterday published a wide-ranging consultation document which holds out the possibility of a radical tightening of the supervisory regime for City institutions that trade in the foreign exchange, interest rate derivatives, commodities and also bond and equity markets.

The proposals include a beefing up of electronic surveillance tools to monitor traders’ activities and a new regime of fines on employees who breach internal guidelines on abuse. Another bold suggestion is to overhaul the infrastructure of capital markets, forcing open new electronic trading platforms to increase competition in markets that are often dominated by a relatively small number of firms.

This story put in an appearance on the independent.co.uk Internet site yesterday sometime---and it's the second offering of the day from reader 'h c'.

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ECB stress tests vastly understate risk of deflation and leverage

The eurozone’s long-awaited stress test for banks has been overtaken by powerful deflationary forces and greatly understates the risk of high debt leverage in a crisis, a chorus of financial experts has warned.

George Magnus, senior advisor to UBS, said it was a “huge omission” for the European Central Bank to ignore the risk of deflation, given the profoundly corrosive effects that it can have on bank solvency. “Most of the eurozone periphery is already in deflation. They can’t just leave this out of their health check. It is a matter of basic due diligence,” he said.

The ECB’s most extreme “adverse scenario” included a drop in inflation to 1pc this year, but the rate has already fallen far below this to 0.3pc, or almost zero once tax effects are stripped out. Prices have fallen over the past six months in roughly half of the currency bloc, and the proportion of goods in the EMU price basket in deflation has jumped to 31pc.

“The scenario of deflation is not there, because indeed we don’t consider that deflation is going to happen,” said the ECB’s vice-president, Vitor Constancio.

This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website at 7:35 p.m. GMT on Monday evening---and it's the third and final offering of the day from reader 'h c'.

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U.K. opts out of Mediterranean migrant rescue mission

Britain has said it will not support the European Union’s planned search and rescue operations to help migrants left stranded in the Mediterranean Sea, even as Italy prepares to wind down its own rescue missions, which have saved thousands of lives.

The U.K.’s Foreign Office argued on Tuesday that the E.U.’s plans to patrol the Mediterranean would only encourage more migrants to attempt the dangerous sea crossing.

The operation, codenamed “Triton”, is headed by the European Union border agency Frontex and is set to begin in November.

"We do not support the planned search and rescue operations in the Mediterranean," said Baroness Joyce Anelay, a Foreign Office minister. "We believe that they create an unintended ‘pull factor’… thereby leading to more tragic and unnecessary deaths."

This news item appeared on the france24.com Internet site yesterday some time---and I thank South African reader B.V. for sending it our way.

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Sweden's Crown Slides as Riksbank Cuts Rates to Zero

The Swedish crown hit a four-year low against the dollar and a four-month trough against the euro on Tuesday after Sweden's central bank surprised investors by cutting interest rates to a record low of zero percent.

Most analysts had forecast the Riksbank would lower its main interest rate, the repo rate, to 0.1 percent from 0.25 percent to fight a risk of deflation, and the central bank went a step further by forecasting a lower rate path for the future.

Riksbank chief Stefan Ingves said the central bank is ready to take unconventional measures that analysts said could include asset purchases, intervening in the currency market to sell crowns or imposing a cap like the Swiss National Bank.

This Reuters article, filed from New York, showed up on their Internet site at 3:25 p.m. EDT on Tuesday afternoon---and I found it embedded in a GATA release.  Reader U.M. sent the same story, but this one was from The Telegraph.  It's headlined "How low can you go? Sweden cuts interest rates to zero".

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Despite "Healthy" Stress Test, Deutsche Bank Replaces CFO With Goldman Sachs Partner

Deutsche Bank executives are dropping like flies. Just days after receiving a clean bill of health from Europe's oh-so-stressful stress-tests, Deutsche Bank has decided that longtime finance chief Stefan Krause needs to be replaced.

Perhaps most interesting is the bank that faces 'serious financial reporting problems' in the U.S. and has a derivatives book literally the size of (actually 20 times bigger) than Germany, has decided the right man for the job is an ex-Goldman Sachs partner. Marcus Schenck, according to the WSJ, will replace Krause, having worked at German utility E.ON until last year when he joined Goldman.

This Zero Hedge news item appeared on their website at 1:27 p.m. EDT on Tuesday afternoon---and it's the second offering of the day from reader 'David in California'.

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Poverty begins to bite in Germany

Almost a sixth of the German population is living below the poverty line, according to the country’s Federal Statistics Bureau.

The bureau on Monday reported on its website that about 13 million people, or 16.1% of the population, earns less than 60% of the average earning of the entire population. This is the guideline set out by the European Union (EU) to establish whether a person may be classified as living below the poverty line.

In 2013 this limit lay at €979 (about R13 700) per month. For a family of two parents with two children, it was €2 056 (about R28 900) per month.

Women and the aged were more vulnerable, according to the bureau. Also the unemployed above 18 years (a full 69.3%) were the victims of poverty. Only 8.6% of those with jobs lived below the poverty line.

This article, filed from The Hague, showed up on the fin24.com Internet site at 19:02 SAST yesterday---and I thank reader B.V. for his second contribution to today's column.

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E.U. clears French, Italian budgets after changes

The European Union's head office said Tuesday it is giving the 2015 French and Italian budgets a provisional green light, saying last-minute commitments to keep deficits down kept them within limits.

E.U. Monetary Affairs Commissioner Jyrki Katainen said that he could not "immediately identify cases of 'particularly serious non-compliance'" with EU rules that force the euro member states to observe strict limits on spending.

France and Italy were accused of being too profligate in their budgetary spending plans at a time when the E.U. and the euro zone have been advocating strict austerity as the best way to beat the financial crisis.

Without naming any member state, Katainen said those that had come under initial suspicion of failing to play by those austerity rules "have responded constructively to our concerns."

This AP story, filed from Brussels, was picked up by the uk.news.yahoo.com Internet site yesterday sometime---and I thank West Virginia reader Elliot Simon for bringing it to our attention.

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Russia to recognize separatist elections in Ukraine's Luhansk and Donetsk

Russia will recognize separatist elections in Ukraine's restive eastern region, Russian Foreign Minister Sergey Lavrov said Tuesday.

"Elections due to be held in the self-proclaimed Luhansk and Donetsk People's Republics on November 2 will be very important from the point of view of the legitimization of power," Lavrov told LifeNews television and the Izvestia newspaper.

Moscow's support for Nov. 2 elections, however, violates the agreed upon Minsk Protocol that established Dec. 7 as the date for early elections in Ukraine's Donetsk and Luhansk regions.

On Monday, U.S. President Barack Obama delivered a message to Moscow, urging Russia to support "legitimate local elections on December 7, in keeping with the agreement that Russia and separatist representatives signed in Minsk, Belarus, on September 5, 2014."

The above four paragraphs are all there is to this short UPI article, filed from Moscow, that appeared on their Internet site at 10:38 a.m. EDT yesterday morning---and it's courtesy of Roy Stephens.

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China Fake Invoice Evidence Mounts as Hong Kong Figures Diverge

The gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened in September to the most this year, suggesting fake export-invoicing is again skewing China’s trade data.

China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5 billion difference, according to government data compiled by Bloomberg. Hong Kong’s imports from China climbed 5.5 percent from a year earlier to $24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to $37.6 billion, according to mainland data on Oct. 13.

While China’s government has strict rules on importing capital, those seeking to exploit yuan appreciation can evade the limit by disguising money inflows as payment for goods exported to foreign countries or territories, especially Hong Kong. The latest trade mismatch coincided with renewed appreciation of China’s currency, leading analysts at banks and brokerages including Everbright Securities Co. and Australia & New Zealand Banking Group Ltd. to question the export surge.

This Bloomberg news item, filed from Beijing, was posted on their website at 9:31 p.m. Mountain Daylight Time on Monday evening---and it's another offering from reader U.M.

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New London gold benchmark to go live in early Q1/2015 - LBMA

A new electronic gold price mechanism is expected to be in operation early in the first quarter of 2015, replacing the century-old gold benchmark, the London Bullion Market Association said on Monday.

The gold industry group said it has launched a survey to request further feedback from market participants on the proposed solutions. Participants will be asked to confirm which solution they will be willing to participate in, the LBMA said.

LBMA said it expects a market consensus will emerge in November after consultation with regulators. In addition, LBMA will undertake testing in December ahead of the launch early next year.

Isn't this special, dear reader!  China, the biggest gold producing and consuming country is not represented---and neither is India, the #2 user of the metal.  Is it just me, or is there something wrong with this picture?  This gold-related Reuters article was posted on their Internet site at 3:38 p.m. EDT on Monday afternoon---and once again I thank reader U.M. for sending it.

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Airport trash bags go under the 'gold' scanner in India

Customs officials at Karipur Airport, which has emerged as one of the top four hotspots for gold smuggling into the country, now have a new headache in the form garbage gold.

With smugglers depositing contraband gold in garbage bags inside flights and retrieving them later, possibly with the help of garbage clearing staff, customs have been forced to take the unprecedented step of conducting X-ray scans on trash bags in flights arriving from the Gulf.

Customs officials said Karipur airport could possibly be the only airport in the country where garbage bags and even food trolleys have to be scanned through the X-ray machine for hidden gold.

The decision was taken following intelligence inputs, which proved right as officials seized 2 kg of gold from one such bags from an Air Arabia flight last week.

This very interesting article, filed from Kozhikode, India, appeared on The Times of India website at 12:27 a.m. IST this morning---and it's the final offering of the day from Manitoba reader U.M., for which I thank her.  It's worth reading.

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Lawrence Williams: Hong Kong gold exports to China pick up strongly but...

...that’s only part of the story. SGE withdrawals seem to be going through the roof – and what about India?

All indicators suggest that there could indeed be a very large supply deficit building. But the markets seem to pay no attention whatsoever given they are no longer driven by supply/demand factors but by the [COMEX] futures markets involving massive amounts of paper gold.

We don’t know what the answer is here, and for how long this imbalance can go on, but it does colour our views as to the long-term gold price. One day gold will surely take off but whether it’s this week, next week, next month, next year or 10 year’s time still remains open to question.  It just depends on how long the big money, and perhaps governments, can keep playing the futures markets to keep commodity prices working to their advantage.

This must read story by Lawrie was posted on the mineweb.com Internet site yesterday---and I found it all by myself.

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Oct 28, 2014

Christmas in October: Desperate Measures

The desperation of Wal-Mart and most of the other mega-retail chains is no more clearly evident than in their relentlessly ridiculous acceleration of holiday marketing displays. I was flabbergasted when I saw Halloween candy, decorations and costumes in row after row BEFORE Labor Day at my local Wal-Mart. Selling Halloween candy two months before Halloween is idiotic and a sure sign of desperation. Retailers have run out of merchandising ideas. I wouldn’t even consider buying Halloween candy until the week before Halloween. Do Wal-Mart freaks of the week actually buy Halloween merchandise in September?

So last week, still a full two weeks before Halloween, Wal-Mart had already converted their entire garden center into a Christmas wonderland of cheap mass produced Chinese cookie cutter Christmas decorations and lights that will blow out after three hours of use. They had also converted aisles at the front of the store to Christmas displays. Who the hell shops for Christmas crap in October? There is nothing like having cheap Chinese Christmas crap available for over two months to create a sense of urgency to buy. Wal-Mart and the rest of the mega-retailers have got nothing. They have no original merchandising ideas. They don’t even try anymore. They source low quality goods from China and compete solely on price. I can’t wait for the Easter candy to appear on Wal-Mart’s shelves in late December.

This article, complete with some 'pithy prose', appeared on theburningplatform.com Internet site on Saturday---and I thank reader U.D. for passing it around on the weekend.

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Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

This news item appeared on The New York Times website on Saturday---and it's the second offering in a row from reader U.D.

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The Day The POMO Died

For those who follow the Fed's daily intervention in the stock market, today is a historic, if bittersweet day: this is the day when the Permanent Open Market Operations (or POMO) as a result of the QE3 program launched in December 2012, finally die (at least until they are reincarnated yet again).

Today, at 11:00 am, the NY Fed's market desk will conclude its 933rd POMO since August 25 of 2005, when it will inject just about a $1 billion in the stock market in the form of a $0.85-$1.05 billion buyback of long-end bonds. And with that, Simon Potter's open market operations desk located on the 9th floor of Liberty 33, will be put on temporary hiatus.

And with that, QE3 will end.  Or not.

This Zero Hedge piece, with a couple of excellent charts, is worth your while---and I thank Manitoba reader U.M. for her first contribution to today's column.

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Negative interest rates threaten to destroy not just savers but IMF as well

The International Monetary Fund has been forced to change the calculation of its most important interest rate after aggressive monetary easing around the world threatened to turn it negative.

Late on Friday the IMF said it was introducing a floor of 0.05 per cent for the interest rate on Special Drawing Rights, its own form of international currency.

The IMF's move shows how global financial conditions are now easier than they have ever been, more than five years after the end of the Great Recession, leading to the lowest interest rates in its 68-year history.

This Financial Times news item appeared on their website last Friday---and it's posted in the clear in this GATA release.  The FT headline reads "IMF Introduces Floor on Interest Rates".

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Canadian household debt hits new high

The ratio of credit market household debt to disposable income hit 163.4 per cent in the second quarter, up from 161.8 per cent in the previous period, the agency said.

Credit market debt strips out trade accounts payable, or short-term credit — normally interest free in order to encourage commerce — that suppliers extend to small businesses, including home businesses.

That number is also about where households in the United States and the United Kingdom stood before home values crashed.

"Today’s report indicates that Canadian households are more financially vulnerable than had previously been thought," said TD economist Diana Petramala in a commentary.

This story appeared on the cbc.ca Internet site back on October 15---and I thank reader 'h c' for sending it our way.

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E.U. commission warns U.K. about its rebate

The UK has to pay its outstanding €2.1bn bill by 1 December or face monthly penalties, EU budget commissioner Jacek Dominik said Monday (27 October) in a press conference.

Dominik said he was "surprised" to witness the "anger" of British Prime Minister David Cameron who last week vowed not to pay the bill at such short notice.

The commissioner said British officials knew since 17 October, when all member states were presented with their corrected share of the EU budget, based on changes in their gross national income (GNI) compared to what they had projected.

"What is extremely important is to remember that these figures are presented by member states based on their own statistics and approved by Eurostat," Dominik said.

This news item, filed from Brussels, showed up on the euobserver.com Internet site at 6:07 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens.

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ECB fails 25 banks in health check but problems largely solved

Roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday.

Painting a brighter picture than had been expected, the ECB found the biggest problems in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged, leaving only a modest €10 billion ($12.7 billion) to be raised.

Italy faces the biggest challenge with nine of its banks falling short and two still needing to raise funds.

The test, designed to mark a clean start before the ECB takes on supervision of the banks next month, said Monte dei Paschi had the largest capital hole to fill at €2.1 billion.

Whistling past the graveyard again, I'm sure.  This Reuters news item, filed from Frankfurt, was posted on their Internet site at 4:18 p.m. EDT on Sunday---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.  Here a story from The Telegraph on the same issue.  It's headlined "ECB: 25 banks not strong enough to withstand another crisis".  I thank Roy Stephens for this one.

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Three reasons why the ECB bank stress tests are sub par

For lovers of contingent capital, asset quality reviews, and tier one capital ratio, it was like Christmas.

As the clock struck 11 in London, the European Central Bank pushed out its modestly entitled “comprehensive assessment” of the financial health of the biggest banks in the Eurozone, which ran to 178 pages.

At the same hour, the European Banking Authority did likewise, pushing out its 51-page report, not to mention hundreds of pages of addendums, additional tables and charts.

For those who know their CRDs from their CRRs – that’s capital requirements directive and capital requirements regulation – the documents were a treasure trove of detailed analysis of the state of the continent’s banks as at December 31 last year.

This in-depth report by The Telegraph's Executive Business Editor appeared on their website at 7:04 p.m. GMT on Sunday evening---and it's courtesy of reader 'h c'.

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The Scariest Number Revealed Today: $1.114 Trillion In Eurozone Bad Debt

As we previously reported, the ECB's latest stress test was once again patently flawed from the start. Why? Because as we noted earlier, in its most draconian, "adverse" scenario, the ECB simply refused to contemplate the possibility of deflation. And here's why. Buried deep in the report, on page 75 of 178, is the following revelation which contains in it the scariest number presented to the public today.

"Due to the fact that on average banks' internal definitions were less conservative than the simplified EBA approach, the application of the simplified approach led to an increase in NPE stock of €54.6 billion from €743.1 billion to €797.7 billion. The CFR and the projection of findings led to an additional increase in NPE of €81.3 billion, resulting in a total increase €135.9 billion to €879.1 billion of post-CFR NPEs across the participating banks as a result of the AQR. The impact of the application of the EBA simplified approach and the credit file review on the stock of NPEs varied amongst debtor geographies, with overall increases among SSM debtor geographies ranging from 7% to 116%."

Translated: due to a lotta ins, lotta outs, lotta what-have-you's, and the now traditional "fluidity" when it comes to European term definitions (recall that as of this year, in Europe hookers and blow contribute to (estimated) GDP otherwise the Eurozone would be in deep triple-dip recession, if not outright depression by now) the stress test, while concluding that Europe's banks are "safe", also uncovered some €136 billion in previously undisclosed NPE or "Non-Performing Exposure", aka Bad Loans - loans which will never be repaid.

Which in turn leads to the new bad loan total amount (that will also in the coming quarters be revised sharply higher) among Eurozone banks: a whopping €879 billion, or some $1.114 trillion at today's exchange rate. This amount to a stunning 9% of the the Eurozone's GDP and is precisely the reason why the ECB can't possibly even conceive of deflation, as without the much needed rising prices to inflate away this NPL debt tumor, Europe's banks are all insolvent, regardless of what today's stress test may have revealed about just a paltry 25 of them.

The above four paragraphs are the 'juice' of this Zero Hedge article---and it falls into the must read category.  It was posted on their Internet site at 7:10 p.m. EDT on Sunday evening---and I found it in yesterday's edition of the King Report.

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Why Germany's households are more fragile than you think

On Sunday, the E.U. released the results of its latest round of testing on the financial health of the continent's lenders.

Meanwhile, the number crunchers at the European Central Bank have also been putting Europe's households under the microscope.

In a new working paper titled "Financial Fragility of Euro Area Households", the ECB examines how different parts of Europe may fare if economic conditions take a turn for the worse.

Specifically, the paper models what impact rising unemployment, falling house prices, and higher interest rates could have on household balance sheets, and the potential consequences for financial stability in the Continent.

The survey of 51,000 households across 14 euro-area countries reveal some surprising results about which countries are most vulnerable to a severe economic shock.

This interesting analysis appeared on The Telegraph's website at 5:00 a.m. GMT on Monday morning---and it's another offering from reader 'h c'.

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Chief MH17 Investigator on German Claims: 'We Will Need Evidence'

SPIEGEL: Germany's foreign intelligence agency, the Bundesnachrichtendienst (BND), believes that pro-Russian separatists shot down the aircraft with surface-to-air missiles. A short time ago, several members of the German parliament were presented with relevant satellite images. Are you familiar with these photos?

Westerbeke: Unfortunately we are not aware of the specific images in question. The problem is that there are many different satellite images. Some can be found on the Internet, whereas others originate from foreign intelligence services.

SPIEGEL: High-resolution images -- those from US spy satellites, for example -- could play a decisive role in the investigation. Have the Americans provided you with those images?

Westerbeke: We are not certain whether we already have everything or if there are more -- information that is possibly even more specific. In any case, what we do have is insufficient for drawing any conclusions. We remain in contact with the United States in order to receive satellite photos.

This brief interview put in an appearance on the German website spiegel.de at 5:12 p.m. Europe time on their Monday afternoon---and my thanks go out to Roy Stephens for this story.  Roy also sent this Russia Today story from yesterday evening Moscow time---and it's headlined "MH17 might have been shot down from air – chief Dutch investigator".

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Spain's export-led recovery comes at a price

Spain’s car industry has come back from the dead, saved by drastic wage cuts that transform the social character of Europe.

The French group Renault has restarted night shifts at its plant in Valladolid this month for the first time in a decade as demand surges for its snazzy bi-tonal Captur, much of it from South Korea of all places.

It is a moment that traumatised workers here in the heartland of old Castile never expected to see again after Spain’s economy crashed into depression six years ago, and then crashed yet deeper before hitting rock bottom in 2012. “We all thought this factory was going to be closed. It was a terrible time,” said Luis Estevez, a manager of the assembly plant.

Other countries may be mothballing lines or cutting shifts as Europe flirts with a triple-dip recession, but Spain’s 17 car factories are firing on all cylinders. Output has risen 20pc over the last two years, on track to reach 2.4m this year and 3m by 2017, leaving Britain, Italy, Russia and, above all, France ever further behind.

This Ambrose Evans-Pritchard article showed up on the telegraph.co.uk Internet site at 1:25 p.m. BST on Saturday---and it's another story courtesy of Roy Stephens.

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Thousands of Hungarians protest against tax on Internet traffic

Thousands of Hungarians protested in Budapest on Sunday against a planned new tax on Internet data transfers, which they said would not only increase the tax burden but would also curb fundamental democratic rights and freedoms.

Prime Minister Viktor Orban's government, which has been widely accused of adopting anti-democratic policies, first unveiled plans for the new tax late on Tuesday in the draft 2015 tax bill submitted to parliament.

The draft tax bill contains a provision for Internet providers to pay a tax of 150 forints (0.38 pounds) per gigabyte of data traffic, though it would also let companies offset corporate income tax against the new levy.

"The move... follows a wave of alarming anti-democratic measures by Orban that is pushing Hungary even further adrift from Europe," the organisers of "100,000 against the Internet tax" said in a press release.

This Reuters article, filed from Budapest, appeared on their website at 8:39 p.m. GMT on their Sunday evening---and I thank West Virginia reader Elliot Simon for finding it for us.

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IS group bids to cut off Kobane, Iraqi Kurds ready to join fight

Islamic State (IS) group fighters made a new bid to cut off the Syrian border town of Kobane from neighbouring Turkey Saturday as preparations gathered pace to deploy Iraqi Kurdish reinforcements.

The Kurdish regional government in northern Iraq unveiled plans on Friday for up to 200 well-trained peshmerga to join Syrian Kurdish forces defending Kobane in the coming week.

Kurdish news agency Rudaw said the first contingent could head to Kobane as early as Sunday but there was no immediate confirmation of that timetable.

Peshmerga ministry spokesman Halgord Hekmat declined to specify what route the Iraqi Kurdish forces would take, but they are expected to travel overland through Turkey, which has said it will allow them transit.

This article was posted on the france24.com Internet site on Saturday some time---and I thank Roy Stephens for sending it our way.

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China launches direct trade between yuan, Singapore dollar, bypassing U.S. dollar

China on Monday announced direct trading between the renminbi and Singapore dollar beginning Tuesday, marking another step toward internationalizing the Chinese currency.

The announcement by China Foreign Exchange Trading System extended the yuan's list of direct onshore trade to more major currencies, including the U.S. dollar, the euro, British sterling, Japanese yen, Australian dollar, New Zealand dollar, Malaysian ringgit, and Russian ruble.

The move aims to boost bilateral trade and investment, facilitate the use of the two currencies in trade and investment settlement, and reduce exchange costs for market players, the foreign exchange trading system said in a statement.

The move is also expected to help Singapore in its bid to become a renminbi offshore center.

This news item appeared on the cntv.cn Internet site yesterday---and I found it over at the gata.org Internet site.

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London hedge fund Red Kite holds more than half LME copper stocks - WSJ

London-based hedge fund Red Kite Group currently holds more than half of London Metal Exchange copper inventories, The Wall Street Journal reported, citing LME traders and brokers.

LME data shows that there is a dominant holder of the LME's copper stocks, accounting for between 50-80 percent of total metal holdings. That would be worth around $534-$854 million based on prices of $6,675 per tonne.

Total LME copper stocks are currently at 159,550 tonnes.

The WSJ cited comments from eight traders and brokers working for different firms active on the LME who said they believe Red Kite Group was the one buying.

The above four paragraphs are all there is to this short Reuters piece that appeared on their Internet site at 9:04 a.m. GMT yesterday morning---and I thank Elliot Simon for his second offering in today's column.  Reader M.A. sent the Zero Hedge spin on this headlined "Copper Surges After Report Mysterious London Buyer Has Cornered Up to 90% of Market".

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Greenspan says he's not aware of gold price suppression through central bank leasing

The opportunity to question former Federal Reserve Chairman Alan Greenspan about central bank intervention in the gold market was spectacularly fumbled today during Greenspan's appearance at the New Orleans Investment Conference.

Interviewing Greenspan, conference moderator Gary Alexander asked if the former Fed chairman was aware of efforts by central banks to suppress the price of gold by leasing the metal to bullion banks, which would sell the metal into the market.

"I'm not aware of anything" like that, Greenspan replied, though of course central bank gold leasing to suppress gold's price was famously a subject of Greenspan's testimony to Congress in July 1998.

During a break in the interview, your secretary/treasurer urged Alexander to follow up with a question about that testimony -- and he did, but only to misquote it. Alexander asked Greenspan if he remembered testifying to Congress that "the Fed," not central banks generally, stood ready to buy gold, not lease it, to influence the price.

Greenspan replied that it was "not conceivable that I would have said that" -- and of course he never did.

This must read GATA release was posted on their website on Saturday afternoon CDT.

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Gold price suppression documents cited in debate at New Orleans conference

Documents that were included in a PowerPoint presentation by your secretary/treasurer during his debate with Doug Casey of Casey Research on Thursday, October 23, at the New Orleans Investment Conference -- a debate whose proposition was "Gold Manipulation: Real or Imagined?," with your secretary/treasurer arguing that it is real -- are cited below, though, because of lack of time, not all of them were reviewed during the debate.

There are a lot of links in this post that I found on the gata.org Internet site yesterday.  So, if you're going to wade through them, I'd start by topping up your coffee if I were you.

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Bill Holter analyzes gold manipulation debate at New Orleans conference

Market analyst Bill Holter, who writes for the Miles Franklin coin and bullion shop in Minnesota and GATA Chairman Bill Murphy's LeMetropoleCafe.com, analyzes the gold manipulation debate between your secretary/treasurer and Doug Casey of Casey Research at the New Orleans Investment Conference last Thursday.

Bill's commentary was posted on the GATA website yesterday.

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Grant Williams: This Little [Swiss] Piggy Bent the Market

In April 1999, the revision of the Federal Constitution was approved (how else than through a referendum?), and it came into effect on January 1, 2000.

Oh... sorry... I almost forgot to mention that in September 1999 — after the revision had been adopted but before it had been officially enacted — the Swiss National Bank became one of the signatories to the Washington Agreement on Gold Sales, meaning that all that lovely Swiss gold which had been sitting there, steadily accumulating and making the Swiss franc one of the last remaining “hard” currencies on the planet, was eligible to be sold.

A single line in the Swiss National Bank’s own history of monetary policy identifies the beginning of the demise of one of the world’s great currencies: On 2 May, the SNB begins selling gold holdings no longer required for monetary policy purposes.

And there you have it. “No longer required for monetary policy purposes.

That’s what happens when you finally embrace the beauty of fiat. Not only do you get to sell gold, you get to call the proceeds of those sales “profits.”  The absurdity borders on breathtaking.

I spent a good deal of time talking to Grant at the Casey Conference in San Antonio last month---and we got along fabulously well.  This long treatise on the Swiss Gold Referendum falls into the absolute must read category, because it spells out in no uncertain terms what's at stake.

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Swiss gold initiative advocates professionalize their campaign and need your help

The campaign in support of the gold referendum initiative in Switzerland on November 30 has been professionalized, erecting a comprehensive Internet site which, while in German, can be automatically translated into English if visited via a Google Chrome Internet browser.

Donations in support of the campaign are being collected at the Gold Switzerland Internet site, operated by Matterhorn Asset Management, whose managing partner, Egon von Greyerz, is a primary proponent of the initiative.

The referendum proposal would bar the Swiss National Bank from selling the country's gold reserves; require the bank to repatriate Swiss gold reserves from foreign vaults and vault all the national gold reserves in Switzerland itself; and hold at least 20 percent of Switzerland's foreign exchange reserves in gold.

Essentially the referendum proposal is a democratic revolt against unaccountable central banking and currency market rigging.

This commentary appeared on the GATA website yesterday as well---and if you're considering donating, this is a must read.

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Swiss gold exports to India cross Rs 70,000 crore; banks turn wary after black money probe

As banks in Switzerland come under greater black money scrutiny, the quantum of gold having left Swiss shores for India so far this year has reached a record high level of over 11 billion Swiss francs (about Rs 70,000 crore).

The gold exports from Switzerland to India stood at over 2.2 billion Swiss francs (about Rs 15,000 crore) in September alone, which is double the figure for the previous month, shows latest data released by Swiss Customs Administration.

While industry watchers attribute the surge during September partly to increased demand for the yellow metal ahead of Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for 'layering' purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.

According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.

This gold-related news item showed up on The Economic Times of India website at 2:30 p.m. IST on their Sunday afternoon---and it's courtesy of reader U.M.  Reader U.M. sent another story about this that appeared on thehindu.com Internet site just after midnight IST on their Monday morning.  It's got a great chart embedded---and it's headlined "Swiss gold exports to India soar; banks wary".

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Black-gold rush? Not really

The doubling of India’s gold imports from Switzerland in September over the previous month has led to speculation that this was black money finding its way back into India. But a close look at the numbers suggests otherwise.  

India imported gold worth 2.2 billion Swiss francs in September, up from 1.1 billion Swiss francs in August, according to data released by the Swiss Customs Administration.

But India is not the only country to witness such a surge in imports of the yellow metal. Total gold exports from Switzerland have doubled from 3 billion Swiss francs in August to 6.4 billion Swiss francs in September.

Other Asian countries such as China, Hong Kong, Thailand and Singapore have also upped their share substantially.  For instance, in August, Hong Kong imported about 100 million Swiss francs worth of gold, which shot up to around 900 million Swiss francs in September. Thailand and China, too, witnessed a similar surge.

This article put in an appearance on thehindubusinessline.com Internet site yesterday sometime---and it's definitely worth reading.  It's another offering from reader U.M., for which I thank her.

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As gold smuggling rises, India's tax office calls for lower import duty

Seizures of smuggled gold by the directorate of revenue intelligence has risen by an unprecedented 330 per cent during the April-September period as compared to last year, prompting the directorate to call on the finance ministry to bring down the import duty on the yellow metal and make smuggling less lucrative.

This development comes even as gold imports have jumped by around 450 per cent year-on-year in September touching $3.75 billion, which calls into question the effectiveness of the high import duty of 10 per cent.

Experts say that import duty has failed to as a deterrent and demand for gold has only gone up.

"There were 2,150 seizures of gold made by the DRI across the country worth over Rs 600 crore in the last six months. This is huge when compared to 500 seizures worth Rs 150 crore made last year during the same period," a government official told The Indian Express on the condition of anonymity.

This gold-related story showed up on the indianexpress.com Internet site at 1:16 a.m. IST on their Monday morning---and I found it embedded in a GATA release.

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Australian scholar says futures markets suppress commodity prices, keep producing nations poor

Thirteen years ago the British economist Peter Warburton wrote that Western central banks were using the futures and derivatives markets and intermediary investment banks to control commodity prices giving rise to the adage: "The futures markets aren't manipulated. The futures markets are the manipulation."

Yesterday MineWeb's Lawrence Williams interviewed a mathematician and former stockbroker who holds a doctorate in math from the University of Melbourne, Australia, Fraser Murrell and who emphatically concurs, describing the futures markets as the mechanism by which the financially sophisticated West loots the developing world, which is dependent for its livelihood on the production of natural resources. The Western countries sustaining these futures markets, Murrell argues, thereby perpetuate poverty in the developing countries.

Of course this has been GATA's complaint for many years, but nobody at GATA has a Ph.D., just tinfoil hats.

As Chris Powell just said, GATA has been at this since 1999---but the real voice in the wilderness is silver analyst Ted Butler, as his 30th anniversary of pounding at the gates on this issue is fast approaching.  Murrell's work is basically a rehash of what Butler and GATA and Peter Warburton have been talking about all these years, but without attribution, of course.  It falls into the must read category and it, plus a few other links are embedded in this GATA release.  The first reader through the door with this mineweb.com article was Manitoba reader U.M.---and it's her final offering in today's column, for which I thank her.

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Giant gold nugget found in California finds secret buyer

One of the largest gold nuggets in modern times pulled from Northern California's Gold Country has sold to a secret buyer.

The new owner of the so-called Butte Nugget and its exact price will both remain mysteries at the buyer's request, the San Francisco Chronicle reported Saturday.

But Don Kagin, the Tiburon-based coin dealer who brokered the deal, said that a "prominent Bay Area collector" paid about $400,000 for the nugget weighing 6.07 pounds. That wasn't far off from the asking price, he said.

"Let's just say it's a win-win for everybody, Kagin said, adding that the nugget went up for sale Thursday with the deal finalized on Friday.

This is, of course, a follow-up story now that the nugget has a happy seller---and probably an equally happy buyer.  This AP item was picked up by the foxnews.com Internet site on Sunday sometime---and I thank reader M.A. for today's last story.

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Oct 25, 2014

Sears to close more than 100 stores and lay off nearly 5,500 employees

Sears Holdings Corp is shuttering more than 100 stores and laying off at least 5,457 employees, investor website Seeking Alpha reported on Thursday, indicating the struggling retailer may be stepping up store closures.

Sears said in August it had closed 96 stores in the six months since February and planned to close a total of 130 under-performing stores during the full fiscal year. It added at the time that it may shutter additional stores beyond the 130 target.

Sears spokesperson Chris Brathwaite declined to comment on the number of planned closures, saying the company would provide an update when it reports quarterly earnings next month. Reducing operations to the best performing stores is key to Sears’ revival strategy, he said.

“While this has resulted in store closures where appropriate – decisions that we do not take lightly – we continue to have a substantial nationwide footprint with a presence in many of the top malls in the country,” Brathwaite said.

This news item appeared on theguardian.com Internet site at 3:33 p.m. EDT on Thursday afternoon---and I thank reader 'h c' for today's first story.

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The U.S. Housing Recovery Has Been Canceled Due To Data Revisions

Last month, when, with great amusement, we reported that "New Home Sales Explode Higher Thanks To... Record High Average New Home Prices?", we mocked the latest batch of bulls hit data released by the U.S. department of truth as follows:

New Home Sales rose a magnificent (seasonally-adjusted annualized rate) 18% in August - the biggest monthly rise since January 1992 albeit with a 16.3 90% confidence interval, meaning the final number may well be +1.7%. At 504k, new home sales are back at May 2008 levels (though obviously massively below the 1.4 million homes sold at the peak in 2005). As a reminder, May's 504K new home sales print was later revised later to 458K. But even more stunning, new home sales in The West rose a mind-numbing 50% in August (and up 84.4% YoY - nearly double). 

Well, it is now a month later, and here come the revisions: first, that 50% surge in the West was revised... 30K lower.

In short: the euphoric, consensus-beating data for every single month since May has been revised lower, by on average 6% and as much as 9%. Perhaps finally people will realize that there is only one number that matters in the Census bureau's monthly new home sales report: the ±15.7 90% confidence interval. Well, people maybe, but not algos, who only care about one thing: whether the data beat or missed.

Now we wonder: will all those market surges over the past 4 months which were based on erroneous headline data, all be revised lower? Sarcasm off.

This short Zero Hedge piece appeared on their website at 10:29 a.m. EDT on Friday---and it's worth your time.  I thank Manitoba reader U.M. for sharing it with us.

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A Furious Albert Edwards Lashes Out at Central Bankers: "Will These Morons Ever Learn?"

Albert Edwards is angry, and understandably so: almost exactly two weeks after warning readers to "sell everything and run for your lives" and the market was on the verge of its first correction in years, several powerful verbal interventions by central banks from the Fed, to the BOJ to the ECB have staged yet another massive rebound which has nearly wiped out all the October losses.

Central-planning aside (and ask how much the USSR would have wished for central planning to indeed have been "aside") we share his frustrations, almost to the point where we would reiterate word for word Edwards' furious outburst, as follows: "Simply put, the central banks for all their huffing and puffing cannot eliminate the business cycle. And they should have realised after the 2008 Great Recession that the longer they suppress volatility, both economic and market, the greater the subsequent crash. Will these morons ever learn?"

Obviously, they will never will because their very entire existence is based on the assumption that what they do can impact the business cycle when all it does is merely delay the inevitable. In this case, a recession whose arrival will be so violent, it will crush not only US stocks, but the overall economy, which has for the past 6 years existed purely on the Fed's CTRL-P fumes. Fumes, which by the looks of things, will evaporate at just the worst possible moment: just when half of the world's entire growth in 2015 is expected to come from the U.S. (the other half from China).

This commentary appeared on the Zero Hedge Internet site at 7:21 p.m. EDT on Thursday evening---and I found it yesterday's edition of the King Report.

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Doug Noland: More Wackoism

Central banks win the day and week.

Markets have grown completely dependent on “Do Whatever it Takes” central control. And six years into a historic global experiment in central bank monetary stimulus, the maladjusted global economy has become dependent upon inflated (and dangerously speculative) securities markets. Meanwhile, the consequences of reckless “money” printing spur deepening social and political tensions. As more begin to question contemporary central bank doctrine, the issue of economic inequality is finally becoming an issue.

There are so many signs pointing to the present as an extraordinary juncture in history. For one, the misconceptions, flaws and unfolding failure of contemporary central banking are coming into clearer view. Yet fragilities associated with a flagging global Bubble ensure only more radical monetary measures. In the name of fighting “deflation” risk, everything has become fair game. God only knows how much “money” they might end up printing.

Doug's weekly Credit Bubble Bulletin is always worth your while---and I thank reader U.D. for bringing this week's edition to our attention.  It was posted on the prudentbear.com Internet site on Friday evening.

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Tiny house sets London record

A house in London the size of two parking spaces has sold for £275,000 ($501,962) in what is likely to be a record for a property that size in the British capital, one of the world's most expensive cities.

It is so small that the bed is suspended over the cooker and you have to clamber over the worktop to get to it.

"There were 33 viewings and five offers," a spokeswoman for estate agents Winkworth said on Thursday.

With 27 years of residential real estate sales under my belt, I recognize a wildly out of control real estate market bubble when I see one---and this one takes the cake.  The story is worth reading---and the photos of the of the 'home' will blow you away.  The article showed up on The Sydney Morning Herald website at 1:12 a.m. local time on their Saturday morning. I thank reader 'h c' for his second offering in today's column.

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E.U. makes Britain pay for recovery

David Cameron is fighting to stop Britain being forced to pay an extra £1.7 billion to the European Union due to the success of the British economy.

The Prime Minister was ambushed with a demand from the European Commission for the extra cash because Britain’s economy has performed better than other economies in Europe since 1995.

The bill is due on December 1 and Mr Cameron is particularly enraged because Brussels accountants are also preparing to give France back £790 million as its economy performed less well than Britain’s.

Tories have been stunned by the news which comes just weeks before the critical by-election in Kent next month, which they will fight against Ukip, and as the European Parliament seeks additional increases to next year’s EU budget, at a extra cost to British taxpayers of £680 million.

You couldn't make this stuff up!  This amazing must read article appeared on The Telegraph's website at 9:39 p.m. BST on their Thursday evening---and I thank reader 'h c' for his third contribution to today's column.

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French Unemployed Hits Record High, Hollande Demands E.U. Budget "Must Be Adapted"

France's President Francois Hollande states confidently that "everyone should respect treaties," then 'Junckers' it with this stunningly hypocritical bullshit, "budget rules must be adapted" to support growth and France "has done what it has to do" on its deficit... one glance at the following chart suggests that Hollande has done nothing and has been enabled by Draghi... What a farce!!

How long before Schaeuble explodes?

This short news item, with an excellent chart, appeared on the Zero Hedge website at 12:12 p.m. EDT yesterday---and I thank reader U.M. for sending it along.

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Merkel: Lifting Sanctions Against Russia Unnecessary

German Chancellor Angela Merkel said Friday that lifting sanctions against Russia was unnecessary.

"We do not find it necessary to speak about lifting sanctions against Russia," Merkel said on the sidelines of the European Summit in Brussels, as quoted by Deutsche Welle.

The German chancellor explained her position by citing the fact that the Minsk agreements have not been fully implemented. In particular, ceasefire is not observed in eastern Ukraine.

On September 19, representatives from Russia, Ukraine, the self-proclaimed Donetsk and Luhansk people's republics and the Organization for Security and Co-operation in Europe (OSCE) formulated a memorandum of nine provisions to regulate the implementation of a ceasefire agreement between Kiev and independence supporters in eastern Ukraine reached during the previous talks of the so-called Contact Group in Minsk on September 5. Since then, both the Kiev forces and independence fighters have been accusing each other of violating the truce.

This 4-paragraph story showed up on the RIA Novosti website at 3:11 p.m. Moscow time on their Friday afternoon---and I thank reader M.A. for sending it our way.

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Hungary's Orban stonewalls U.S. corruption allegations

Hungary is demanding the U.S. hand over evidence after the Americans placed an entry ban on six officials close to Viktor Orban’s government last week.

The Hungarian prime minister in Brussels on Friday (24 October) told reporters that his country would not launch any investigation into the corruption allegations on the six without first seeing some proof.

“Without evidence you cannot accuse anyone,” he said. One of the accused is reportedly his own special advisor.

Orban told this website he was not proud that Hungary was the first E.U. member state to have a US-entry ban on officials.  Normally being first is something to be proud of, "but not in this case", he said.

This longish story, filed from Brussels, showed up on the euobserver.com website at 6:04 p.m. Friday evening Europe time---and it's courtesy of Roy Stephens.

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Renzi stirs up E.U. row ahead of eurozone meeting

Eurozone leaders are meeting on Friday to discuss the issue of public deficits and debt, as France and Italy are in breach of the EU rules.

Ahead of the meeting, Italian Prime Minister Matteo Renzi stirred up a row with outgoing EU commission chief Jose Manuel Barroso, who criticised his decision to publish a commission letter warning him about the budget deficit.

Renzi said he could not understand Barroso's "surprise" about the published letter, given that the Financial Times and Italian media had already "anticipated" it.

"I think it's time for total and open transparency, the time has come to put an end to secret letters in this building. With Italy there will be total clarity about anything that comes from Brussels, because we think that's the only way to help citizens understand what is going on," Renzi told journalists on the margins of an EU summit.

This article is the second one in a row from the euobserver.com Internet site.  It was posted there at 9:27 a.m. Europe time on Friday---and it's also courtesy of Roy Stephens.

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Italy’s in terminal decline, and no one has the guts to stop it

Everything that’s wrong with France is worse here.

The Rome Opera House sacked its entire orchestra and chorus the other day. Financed and managed by the state, and therefore crippled by debt, the opera house — like so much else in Italy — had been a jobs-for-life trade union fiefdom. Its honorary director, Riccardo Muti, became so fed up after dealing with six years of work-to-rule surrealism that he resigned. It’s hard to blame him. The musicians at the opera house — the ‘professori’ — work a 28-hour week (nearly half taken up with ‘study’) and get paid 16 months’ salary a year, plus absurd perks such as double pay for performing in the open air because it is humid and therefore a health risk. Even so, in the summer, Muti was compelled to conduct a performance of La Bohème with only a pianist because the rest of the orchestra had gone on strike.

After Muti’s resignation, the opera house board did something unprecedented: they sacked about 200 members of the orchestra and chorus, in a country where no one with a long-term contract can be fired. It was a revolutionary — dare one say Thatcherite? — act. If only somebody would have the guts to do something similar across the whole of the Italian state sector. But nobody will. Italy seems doomed.

This longish essay appeared on the spectator.co.uk Internet site on Friday BST---and it's certainly worth reading if you have the time.  My thanks got out to South African reader B.V. for bringing it to our attention.

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Eastern Europe Shivers Thinking About Winter Without Gas

As winter approaches, former Soviet satellite nations from Poland to Bulgaria are watching Russia and Ukraine’s stalled gas negotiations with growing trepidation.

The lack of discernible progress is sending a collective shiver down the spine of Eastern Europe, which retains vivid memories of Russian energy cuts during unusually cold winters in 2006 and 2009. The ensuing shortages led to shuttered factories and a return to wood for heating and cooking in rural areas.

Despite the two episodes, little has been done to diversify supplies within a region that remains highly dependent on energy delivery systems dating back to the Soviet era.

If Moscow and Kiev don’t reach a compromise before winter and OAO Gazprom fails to restart supplies to its western neighbor, Ukraine may resort to siphoning off gas carried through its territory. As in 2009, that could prompt Russia to cut transit through Ukraine altogether, leaving parts of eastern Europe exposed to severe shortages.

This very interesting Bloomberg article, co-filed from Prague and Belgrade, was posted on their Internet site at 5:48 a.m. Denver time on Friday morning---and I thank reader U.M. for finding it for us.

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Russia detains airport staff after Total CEO's runway death

Russian investigators detained four more staff members Thursday at the Moscow airport where the CEO of French oil giant Total died when his plane collided with a snowplough.

Those detained include an intern air traffic controller, her supervisor, who was in charge of flights at the time, and the heads of the airport's air traffic controllers and runway cleaners.

Investigators had already detained the driver of the snowplough and a court hearing on Thursday was expected to sanction his arrest.

On Thursday, investigators said the 60-year-old Vladimir Martynenko had 0.6g (per litre) of alcohol in his blood, double the Russian drink-driving limit.

This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for sending it.  There was also a story about this on the RIA Novosti website---and it's headlined "Moscow Court Arrests Air Traffic Controller in Fatal Plane Crash"---and it's courtesy of reader M.A.

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Putin accuses U.S. of causing global instability

Russian President Vladimir Putin has accused the U.S. of undermining global stability, and warned that the world will face new wars if Washington does not respect the interests of other nations.

During a speech in the Russian city of Sochi, the President argued that while Moscow does not see Washington as a threat, U.S. foreign policy has created chaos. Citing the wars in Iraq, Libya and Syria, he went on to accuse the U.S. and its allies of “fighting against the results of its own policy”.

“They are throwing their might to remove the risks they have created themselves, and they are paying an increasing price,” Putin told political experts at the Black Sea resort.

“I think that the policies of the ruling elite are erroneous. I am convinced that they go against our interests, undermine trust in the United States,” he said without offering specific examples.

This right-on-the-money  article was posted on the independent.co.uk Internet site on Friday---and it's the second offering of the day from reader B.V.

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How to Start a War and Lose an Empire

A year and a half I wrote an essay on how the U.S. chooses to view Russia, titled The Image of the Enemy. I was living in Russia at the time, and, after observing the American anti-Russian rhetoric and the Russian reaction to it, I made some observations that seemed important at the time. It turns out that I managed to spot an important trend, but given the quick pace of developments since then, these observations are now woefully out of date, and so here is an update.

At that time the stakes weren't very high yet. There was much noise around a fellow named Magnitsky, a corporate lawyer-crook who got caught and died in pretrial custody. He had been holding items for some bigger Western crooks, who were, of course, never apprehended. The Americans chose to treat this as a human rights violation and responded with the so-called “Magnitsky Act” which sanctioned certain Russian individuals who were labeled as human rights violators. Russian legislators responded with the “Dima Yakovlev Bill,” named after a Russian orphan adopted by Americans who killed him by leaving him in a locked car for nine hours. This bill banned American orphan-killing fiends from adopting any more Russian orphans. It all amounted to a silly bit of melodrama.

But what a difference a year and a half has made! Ukraine, which was at that time collapsing at about the same steady pace as it had been ever since its independence two decades ago, is now truly a defunct state, with its economy in free-fall, one region gone and two more in open rebellion, much of the country terrorized by oligarch-funded death squads, and some American-anointed puppets nominally in charge but quaking in their boots about what's coming next. Syria and Iraq, which were then at a low simmer, have since erupted into full-blown war, with large parts of both now under the control of the Islamic Caliphate, which was formed with help from the US, was armed with US-made weapons via the Iraqis. Post-Qaddafi Libya seems to be working on establishing an Islamic Caliphate of its own. Against this backdrop of profound foreign US foreign policy failure, the US recently saw it fit to accuse Russia of having troops “on NATO's doorstep,” as if this had nothing to do with the fact that NATO has expanded east, all the way to Russia's borders. Unsurprisingly, US–Russia relations have now reached a point where the Russians saw it fit to issue a stern warning: further Western attempts at blackmailing them may result in a nuclear confrontation.

The American behavior throughout this succession of defeats has been remarkably consistent, with the constant element being their flat refusal to deal with reality in any way, shape or form. Just as before, in Syria the Americans are ever looking for moderate, pro-Western Islamists, who want to do what the Americans want (topple the government of Bashar al Assad) but will stop short of going on to destroy all the infidel invaders they can get their hands on. The fact that such moderate, pro-Western Islamists do not seem to exist does not affect American strategy in the region in any way.

This long essay, posted on the Information Clearing House website on Tuesday, had to wait for today's column.  It falls into the absolute must read category, especially for all serious students of the New Great Game---and if I had to distill today's column down to just one article, this would be it!  I had three or four readers send me this piece this week, but the first one through the door was Rob Bentley.

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Turkey to Refrain From Sanctioning Russia: Turkish Ambassador to Russia

Turkish authorities do not intend to impose sanctions on Russia if asked by the United States or the European Union, Turkish Ambassador to Russia Umit Yardim told RIA Novosti on Friday.

"I do not see the Russian-Turkish relations within the framework of these sanctions [against Russia]. Russia-Turkey relations develop naturally and they are special in their own way. We will keep our relations that way," Yardim said.

"While I worked in Iran, I realized that sanctions are not a method that leads to expected results in politics. Turkey follows the decisions made by the U.N. It concerns not only Turkey but all U.N. member states," the ambassador added.

This brief news item showed up on the RIA Novosti website at 3:48 p.m. Moscow time on their Friday afternoon---and it's courtesy of reader M.A.

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Pepe Escobar: A Caliph in a wilderness of mirrors

He's invincible. He beheads. He smuggles. He conquers. He's the ultimate jack-of-all-trades. No Tomahawk or Hellfire can touch him. He always gets what he wants; in Kobani; in Anbar province; with the House of Saud (which he wants to replace) trying to make Putin (who he wants to behead) suffer because of low oil prices.

If this was a remake of Orson Welles's noir classic The Lady from Shanghai, in the mirror sequence the lawyer (American?) and the femme fatale (Shi'ite?) would also get killed; but The Caliph of Islamic State would survive as a larger than life Welles, free to roam, plunder and "give my love to the sunrise" - as in a Brave Caliphate World shining in "Syraq" over the ashes of the Sykes-Picot agreement.

He's winning big in Iraq's Anbar province. The Caliph's goons are now closing in on - of all places - Abu Ghraib; Dubya, Dick and Rummy's former Torture Central. They are at a mere 12 kilometers away from Baghdad International. A shoulder-launched surface-to-air missile (or MANPAD) away from downing a passenger jet. Certainly not an Emirates flight - after all these are trusted sponsors.

Hit, in Anbar province, is now Caliph territory. The police forces and the province's operational command have lost almost complete control of Ramadi. The Caliph now controls the crucial axis formed by Hit, Ramadi, Fallujah; Highway 1 between Baghdad and the Jordanian border; and Highway 12 between Baghdad and the Syrian border.

This longish but interesting essay appeared on the Asia Times website ten days ago---and after thinking about it over the last weekend, I decided to stick it in today's column, as it was too long and off-topic for a weekday column.  The last person to send it to me was South African reader B.V.

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The Secret Casualties of Iraq’s Abandoned Chemical Weapons

The soldiers at the blast crater sensed something was wrong.

It was August 2008 near Taji, Iraq. They had just exploded a stack of old Iraqi artillery shells buried beside a murky lake. The blast, part of an effort to destroy munitions that could be used in makeshift bombs, uncovered more shells.

Two technicians assigned to dispose of munitions stepped into the hole. Lake water seeped in. One of them, Specialist Andrew T. Goldman, noticed a pungent odor, something, he said, he had never smelled before.

He lifted a shell. Oily paste oozed from a crack. “That doesn’t look like pond water,” said his team leader, Staff Sgt. Eric J. Duling.

The specialist swabbed the shell with chemical detection paper. It turned red — indicating sulfur mustard, the chemical warfare agent designed to burn a victim’s airway, skin and eyes.

I am never sure anymore about the accuracy of the international stories that are posted on The New York Times website, as this paper is basically a propaganda machine for the U.S. government when required to be.  So keep that in mind when you read this---and it certainly is worth reading.  It was posted on their Internet site ten days ago---and I thank Dan Lazicki for sending it our way---and it's another article that had to wait for my Saturday column.

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The Zombie System: How Capitalism Has Gone Off the Rails

A new buzzword is circulating in the world's convention centers and auditoriums. It can be heard at the World Economic Forum in Davos, Switzerland, and at the annual meeting of the International Monetary Fund. Bankers sprinkle it into the presentations; politicians use it leave an impression on discussion panels.

The buzzword is "inclusion" and it refers to a trait that Western industrialized nations seem to be on the verge of losing: the ability to allow as many layers of society as possible to benefit from economic advancement and participate in political life.

The term is now even being used at meetings of a more exclusive character, as was the case in London in May. Some 250 wealthy and extremely wealthy individuals, from Google Chairman Eric Schmidt to Unilever CEO Paul Polman, gathered in a venerable castle on the Thames River to lament the fact that in today's capitalism, there is too little left over for the lower income classes. Former US President Bill Clinton found fault with the "uneven distribution of opportunity," while IMF Managing Director Christine Lagarde was critical of the numerous financial scandals. The hostess of the meeting, investor and bank heir Lynn Forester de Rothschild, said she was concerned about social cohesion, noting that citizens had "lost confidence in their governments."

It isn't necessary, of course, to attend the London conference on "inclusive capitalism" to realize that industrialized countries have a problem. When the Berlin Wall came down 25 years ago, the West's liberal economic and social order seemed on the verge of an unstoppable march of triumph. Communism had failed, politicians worldwide were singing the praises of deregulated markets and US political scientist Francis Fukuyama was invoking the "end of history."

This 4-part essay appeared on the German website spiegel.de late in the afternoon Europe time on their Thursday---and had to wait for today's column as well.  The first person to send me this long but worthwhile read was Roy Stephens.

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Assange: Google Is Not What It Seems

In June 2011, Julian Assange received an unusual visitor: the chairman of Google, Eric Schmidt, arrived from America at Ellingham Hall, the country house in Norfolk, England where Assange was living under house arrest.

For several hours the besieged leader of the world’s most famous insurgent publishing organization and the billionaire head of the world’s largest information empire locked horns. The two men debated the political problems faced by society, and the technological solutions engendered by the global network—from the Arab Spring to Bitcoin.

They outlined radically opposing perspectives: for Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with U.S. foreign policy objectives and is driven by connecting non-Western countries to Western companies and markets. These differences embodied a tug-of-war over the Internet’s future that has only gathered force subsequently.

In this extract from When Google Met WikiLeaks Assange describes his encounter with Schmidt and how he came to conclude that it was far from an innocent exchange of views.

This very long and somewhat disturbing article appeared on the newsweek.com Internet site during the lunch hour on the east coast on Thursday.  It's certainly worth reading if you have the time---and as I skimmed parts of it, James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline" came to mind for the second time this week.  I thank Michael Cheverton for bringing this Newsweek article to our attention.

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Casey Research: Blood in the Streets to Create the Opportunity of the Decade

Gold stocks staged spring and summer rallies this year, but haven’t able to sustain the momentum. Many have sold off sharply in recent weeks, along with gold. That makes this a good time to examine the book value of gold equities; are they objectively cheap now, or not?

By way of reminder, a price-to-book-value ratio (P/BV) shows the stock price in relation to the company’s book value, which is the theoretical value of a company’s assets minus liabilities. A stock is considered cheap when it’s trading at a historically low P/BV, and undervalued when it’s trading below book value. From the perspective of an investor, low price-to-book multiples imply opportunity and a margin of safety from potential declines in price.

We analyzed the book values of all publicly traded primary gold producers with a market cap of $1 billion or more. The final list comprised 32 companies. We then charted book values from January 2, 2007 through last Thursday, October 15. Here’s what we found.

Well, dear reader, there's no question that blood is definitely running in the streets as far as the precious metals complex is concerned, but the only reason that it is, is because of the iron grip that JPMorgan et al are exerting in the Comex futures market at the moment.  But if you're standing around with money to invest, this is as close to the bottom as you're likely to get.  This commentary on gold stocks showed up on the Casey Research website yesterday.

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Platinum and palladium price Fixing settled - now for gold

It was announced a week ago by the London Platinum and Palladium Fixing Company Limited (LPPFCL) that the responsibility for administering a new electronic Fixing process for the two metals has been awarded to the now Hong Kong-owned London Metal Exchange (LME). 

The LPPFCL had previously announced the setting up of a Request for Proposal (RFP) following a review of its Fixing process at the end of July. This was with the aim of appointing a third party to assume responsibility for the administration of the Fixing in place of the LPPFCL. The recent announcement was that the LME had been selected and has committed to become the new administrator of the Fixing process. 

The LPPFCL is now finalising arrangements for the transfer of the administration of the Fixing to the LME with effect from 1 December 2014 while the LME has in the meantime developed a bespoke platform (LMEbullion) that will provide for the necessary electronic pricing solution. 

The LPPFCL had been administering the pricing system for the metals for the past 25 years utilising a closed telephone call system but had decided, in the light of doubts being cast on the integrity of the various precious metals fixing processes, to seek a new electronic answer to pricing the metals.

These changes are all smoke and mirrors, dear reader, because as long as JPMorgan et al are allowed to run rampant in the Globex trading system with impunity, nothing will change, as the 'fix' will always be in.  This article by Lawrence Williams appeared on the mineweb.com Internet site yesterday---and I thank Manitoba reader U.M. for her final contribution to today's column.

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CNBC's Rick Santelli and the Swiss gold vote

Rick wades into the gold issue in Switzerland---and his comments on it start at the 1:15 minute mark of this 2:24 minute CNBC video clip from yesterday.  I thank Mark Magarian for sending it our way.

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Paying people their worth in gold -- a first in Singapore

How would you like to be paid your worth in gold? Singapore-based precious metals dealer BullionStar is doing just that by rewarding staff with the commodity as salary, and it says it is the first in the country to do so.

Here is how it works: If, for example, you earn S$3,200 a month, you can choose to be paid in two gold bars each worth S$1,600. Theoretically, if you are a high earner drawing a pay of S$51,000 a month, you can choose to be paid with a one-kilogram gold bar.

Sales manager Vincent Tie is one of six employees at BullionStar who has opted to receive his salary in bullion. About 20 to 40 per cent of the 38-year-old's basic pay is given in gold.

"If I save in a paper currency in a bank, the interest paid to me cannot beat the rate of inflation, so essentially I am losing purchasing power. That means that I am buying less with my wealth," Mr Tie said about why he went for the heavy metal option.

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